BMC Builds Sales Momentum in First Quarter

BMC reports a 7 percent increase in revenue on total sales of $385 million.

BMC Software continued to build on its momentum in its first fiscal quarter of 2008 by posting 7 percent revenues gains to $385 million and net income of $57 million.
The Houston-based software company, building on its competitive lead in the business service management space, racked up earnings per share of 28 cents, compared to 15 cents per share in the same quarter one year ago, when net income was $31 million.
"BSM is a key driver for our improved performance," said CEO Bob Beauchamp in BMCs earnings call. "During the quarter we had a number of strategic wins (including) the U.S. Army, PG&E, the EPA, FAA, federal postal service and the Department of Veterans Administration. We continue to invest in technology and people to continue our lead in that high-growth market," he added.

During the quarter, BMC closed its acquisition of ProactiveNet and announced its planned acquisition of RealOps, a provider of what is called run book automation, the process of describing, mapping and automating IT management procedures.
"The next big step forward for BSM lies in advancing IT process automation. That coupled with our Atrium [Configuration Management Database] will allow IT to integrate management functions across a range [of disciplines and] will enable IT to improve productivity and service levels while reducing costs," said Beauchamp.
Also during the quarter, BMC saw significant wins in its mainframe management business, where IDC recently ranked BMC as the top mainframe database development and management tools provider. Specifically, BMC displaced competitor CA in one of the largest mainframe deals it signed during the quarter, according to Beauchamp.
Whether the 7 percent increase in mainframe revenues for the quarter reflects growth momentum in that business, which Beauchamp characterized as "lumpy," is not yet clear, however.
Beauchamp hinted at a handful of potential developments to come in the next year or so, including a more forceful move into the network management space, where BMC has very little presence.
"I think that some of the older technologies out there are tired and in need of generational replacement. There are new technologies in the network management space, [including] some weve been working on internally and others in the hands of other companies we find intriguing. Within a year, expect us to strengthen our offerings through some combination of those offerings," said Beauchamp in a follow-up interview with eWEEK.
Beauchamp also said that BMC is working to address a gap in the ability of IT to manage the complexity that comes with virtualizing IT resources such as servers, storage and more.
Despite the large investments Hewlett-Packard is making in the management space, BMC has yet to feel the competitive heat as HP struggles to integrate Mercury Interactive into its culture and rationalize overlapping products. HPs recent announcement of its intent to acquire data center automation provider Opsware could help to boost the effectiveness of both companies efforts to address that space.
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"I think it will add more credibility to the run book automation space through the iConclude component of Opsware. [With BMCs RealOps acquisition], well see that market go from small to large very rapidly. Having two large vendors in this space will ignite the market and customers will recognize the powerful value of having an automation engine sitting on top of BSM," he said.
BMC expects that its revenue growth for fiscal 2008 will be in the mid-single digits. Specifically, for the second fiscal quarter of 2008, BMC expects to generate revenues of between $395 million and $410 million.
Earnings per share for the second quarter are projected to range from 39 to 44 cents on a non-Generally Accepted Accounting Principals basis. For the full year, BMC expects to generate non-GAAP earnings per share of $1.69 to $1.79.
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